If you are preparing to go through a divorce in Orange County, and particularly a divorce involving substantial assets or income, there is a lot you need to know.
All divorces present challenges, regardless of the circumstances involved. With that said, the particular circumstances involved in a divorce are also highly relevant, and the couple’s shared wealth, the spouses’ respective incomes, the ages of the couple’s children, and the spouses’ respective occupations are just a small sampling of the numerous issues that will determine both the process and the outcome of a couple’s divorce.
California is a “no-fault” divorce state. This means that spouses can choose to get divorced for any reason or no reason at all. It also means that any evidence of “marital fault” (i.e. adultery) will only have a limited impact on the outcome of a couple’s divorce if it has any impact at all. In California, the divorce process focuses on ensuring a fair outcome for both spouses; and, from a financial perspective, it considers the marital standard of living they enjoyed during their marriage.
The Four Major Aspects of a High-Net-Worth Divorce
For couples in Orange County who have children, there are four major aspects of the divorce process. If you and your spouse do not have children together, then there will only be two major aspects of your divorce. However, each aspect involves its own complexities and subtleties, and this is especially true in cases involving substantial assets or income (or both).
1. Property Division
In the absence of a prenuptial agreement, California law requires divorcing spouses to divide their marital assets equally. This is true regardless of the spouses’ respective contributions to their shared wealth—with only very limited exceptions. For high-net-worth spouses, ensuring an appropriate distribution of marital assets can involve a variety of issues, including:
- Accurately distinguishing between “separate” and “marital” assets
- Obtaining accurate (and mutually agreeable) valuations of high-value assets
- Placing a correct value on retirement accounts and investment portfolios
In addition to dividing the couple’s marital assets, it is necessary to divide their marital debts as well. While secured debts usually go with the assets that secure them, this is not always the case, and in many cases, high-net-worth spouses will decide to pay off certain debts during the divorce process.
2. Spousal Support
High-net-worth divorces in Orange County can often involve fairly substantial spousal support (alimony) awards. There are exceptions. Rather than entitling the lower-earning spouse to a specific percentage of the higher-earning spouse’s post-divorce income, California law requires consideration of a laundry list of factors to determine how much spousal support is both necessary and appropriate. Crucially, when a marriage has lasted 10 years or longer, California law allows alimony to be awarded with no end date. For shorter marriages, the Orange County courts will generally award support for at least half of the duration of the marriage.
With all of that said, an award of spousal support is not mandatory. If both spouses are financially independent and able to maintain their standard of living post-divorce, then it may be the case that no spousal support award is warranted.
3. Child Support
For divorcing parents, establishing child support is a necessary aspect of the divorce process. While the California Child Support Guidelines (the “Guidelines”) are used to calculate parents’ financial responsibility in most cases, the Guidelines do not lend themselves well to extraordinarily high-income scenarios. As a result, extraordinary-earning spouses and couples will generally need to address factors outside of those prescribed by the Guidelines when calculating child support—while still giving due consideration to the provisions of the Guidelines that apply.
Additionally, high-net-worth parents in Orange County will frequently find it advantageous to address child-related expenses not covered by child support during the divorce process. Most significantly, child support generally does not cover college tuition and expenses, so divorcing parents will need to address these costs independently of their child support calculation.
4. Child Custody
In California, parents have many options when it comes to how they choose to structure child custody (now more commonly referred to as parenting time) after their divorce. As long as their arrangement reflects the best interests of their children, parents can factor in their work schedules, travel needs, and other pertinent considerations. Co-parenting is becoming an increasingly popular option as well; although, in order for co-parenting to work, both parents need to be open to jointly spending time with their children after their divorce.
Regardless of what the parents choose to do, after establishing a child custody plan (or parenting time plan), it is imperative that both parents strictly adhere to the terms of their arrangement. Deviating from a court-approved custody arrangement can have significant negative ramifications, and, with this in mind, both parents need to prioritize developing a workable arrangement during their divorce.
The Four Primary Options for Resolving Your Divorce
Depending on the circumstances, the divorce process can involve amicable out-of-court negotiations, contentious courtroom litigation, and/or various methods of alternative dispute resolution. Oftentimes, high-net-worth spouses will be able to resolve most aspects of their divorce informally but will need to rely on the advice of experts or a more-structured setting to come to terms on certain discrete issues.
Broadly speaking, the three primary options for resolving a divorce in Orange County are:
1. Uncontested /Cooperative Divorce
In order to file for an uncontested divorce, the spouses must be in agreement with regard to all of the major substantive issues involved (i.e., property division, spousal support, child support, and child custody). Once an agreement has been reached, either spouse can submit a “stipulated agreement” for the court’s approval. Assuming the court approves—which will generally be the case when both spouses have been represented by legal counsel—then the terms of the spouses’ stipulated agreement will become binding upon the formal dissolution of the spouses’ marriage.
Cooperative divorce is a process that starts with the spouses’ mutual commitment to avoid court. This commitment sets the stage for good-faith settlement negotiations, which can continue for as long as it takes for the spouses to come to terms. In many cases, divorcing spouses will engage outside experts to provide insights and opinions during the cooperative process—for example, they may hire a business valuation expert to determine the value of a privately-held business, or they may hire a child psychologist to help them make custody-related decisions with their children’s needs and best interests in mind.
Once spouses come to terms through the cooperative divorce process, they will then finalize their divorce through a signed agreement, as discussed above. If negotiations break down on a particular issue, the spouses can resort to mediation or litigatio in order to find an amicable solution.
3. Divorce Mediation
Divorce mediation is an option for high-net-worth spouses who want to avoid litigation but need help finding a path forward with a professional mediator. In divorce mediation in Orange County, each spouse can be represented by his or her own attorney, and the parties work with a neutral third-party mediator to find ways to resolve their differences. While it is possible to mediate the entirety of a high-net-worth divorce, mediation can also be used as a tool for resolving conflicts pertaining to specific issues—from ownership of individual assets to working out a manageable parenting time schedule.
4. Divorce Litigation
For spouses who are unable to come to terms, divorce litigation provides a path forward. Just like any other civil lawsuit, a litigated divorce involves pleadings, discovery, motions practice and trial. During divorce litigation, each spouse can seek temporary orders as necessary (i.e., relating to financial support or parenting time), and each spouse will present his or her case to a judge who will issue a binding judgment. Once a judgment is rendered, both spouses must abide by the court’s decision, and any deviations can lead to being held in contempt of court.
Divorces Involving Particular Circumstances
While all high-net-worth divorces in Orange County present certain unique challenges, there are various circumstances that can add complexity to the process. At Seastrom Tuttle & Murphy, we have particular experience guiding Orange County residents through divorces involving the following scenarios:
Getting Divorced When You Have a Prenuptial Agreement
While prenuptial agreements are legally enforceable in California, there are various grounds for challenging the enforceability of a prenup as well. When preparing to go through a divorce with a prenup, the first step is to ascertain whether and to what extent your agreement is subject to being challenged. If your prenup is fully enforceable, then the terms of your agreement will govern all pertinent aspects of your divorce. However, you will still need to separately address any issues that aren’t covered (including, but not limited to, child custody, which cannot be addressed via prenup in California).
If you want to challenge any provisions of your prenup (or if your spouse challenges your prenup in Orange County court), then this challenge will need to be resolved before you can move forward with the aspects of your divorce that are potentially subject to the terms of your agreement. Depending on the circumstances at hand, it may or may not make sense to begin working on the other aspects of your divorce while your prenup dispute is pending.
Getting Divorced as a Senior Citizen
Getting divorced later in life involves certain unique implications. If you are among the growing number of people wishing to pursue a divorce as you approach retirement (or after reaching retirement age), it will be important for you to carefully consider these implications as you work through the divorce process. Spousal support and the division of retirement assets are often of particular concern in these “grey divorces,” and spouses who have accumulated substantial wealth during their lives can face particular burdens about determining how to divide their marital estate.
Getting Divorced as a Same-Sex Spouse
In California, getting divorced as a same-sex spouse generally involves the same legal issues and procedures as ending an opposite-sex marriage. However, same-sex spouses can still face some unique challenges during the process, particularly in the area of child custody. For same-sex spouses whose relationship predates their marriage by a significant amount of time, this can have an impact on the property-related and financial aspects of their divorce as well.
Getting Divorced as an Entrepreneur or Business Owner
In the absence of a comprehensive prenuptial agreement, getting divorced as an entrepreneur or business owner can involve complicated issues pertaining to business ownership and control. In addition to securing an accurate valuation for purposes of your divorce, you will need to determine what portion of your business (or your business’s assets) are subject to division under California’s community property law.
Getting Divorced as a Licensed Professional
For licensed professionals, getting divorced can present unique issues with regard to ongoing ownership of ownership interests in private practices, dealing with spousal support and child support, and securing the child custody rights you desire. While under no circumstances should your profession be used against you, the reality is that earning substantial income as a practicing professional can lead to challenges during the divorce process. For more information, we encourage you to read:
- Getting Divorced as an Attorney in Orange County
- Getting Divorced as a Medical Professional in Orange County
Resources for Orange County Residents Who are Contemplating Divorce
If you would like more information about preparing to go through a divorce as a high-net-worth resident of Orange County, we encourage you to schedule a confidential initial consultation at Seastrom Tuttle & Murphy. You can also use these resources to learn more about what you can expect during and after your divorce:
- Orange County Courts Family Law Division
- Orange County Family Court Services
- Orange County Child Support Services
- Seastrom Tuttle & Murphy Blog
Speak with an Orange County High-Net-Worth Divorce Lawyer at Seastrom Tuttle & Murphy
Is it time for you to discuss your situation with an Orange County divorce lawyer? To schedule a confidential consultation in person or over the phone at a time that is convenient for you, please call 949-474-0800 or contact us online today.